DCT
2:16-cv-00152
Phoenix Licensing LLC v. Consumer Cellular Inc
Key Events
Complaint
I. Executive Summary and Procedural Information
- Parties & Counsel:
- Plaintiff: Phoenix Licensing, L.L.C. (Arizona) and LPL Licensing, L.L.C. (Delaware)
- Defendant: Consumer Cellular, Inc. (Oregon)
- Plaintiff’s Counsel: Russ August & Kabat
- Case Identification: 2:16-cv-00152, E.D. Tex., 02/22/2016
- Venue Allegations: Venue is asserted as proper in the Eastern District of Texas because the Defendant is subject to personal jurisdiction in the district and has allegedly committed acts of patent infringement there.
- Core Dispute: Plaintiffs allege that Defendant’s system for generating customized marketing communications for its cellular phone services infringes eight patents related to automated systems for marketing financial products.
- Technical Context: The technology relates to computerized systems that use customer and product data with decision-making logic to automatically generate personalized marketing offers, moving beyond generic mass-mailings.
- Key Procedural History: The complaint emphasizes the patents' extensive prosecution history, noting that the patent family has been under examination for over nineteen years, has overcome hundreds of prior art references, and that several patents-in-suit issued after the Supreme Court’s decisions in Bilski and Mayo. Three of the family's patents have been confirmed in reexamination proceedings, with one surviving two successive reexaminations.
Case Timeline
| Date | Event |
|---|---|
| 1996-06-10 | Earliest Priority Date for ’434, ’317, ’632, ’435, ’184, ’366, ’744 Patents |
| 1997-04-21 | Bank Investment Product News article describes the technology (p. 8) |
| 1999-07-16 | Earliest Priority Date for ’938 Patent |
| 1999-11-16 | U.S. Patent No. 5,987,434 Issues |
| 2005-01-01 | Alleged start of Defendant's direct mail and email marketing (approx.) |
| 2006-02-14 | U.S. Patent No. 6,999,938 Issues |
| 2010-12-28 | U.S. Patent No. 7,860,744 Issues |
| 2011-02-15 | U.S. Patent No. 7,890,366 Issues |
| 2012-07-31 | U.S. Patent No. 8,234,184 Issues |
| 2013-01-08 | U.S. Patent No. 8,352,317 Issues |
| 2013-12-10 | U.S. Patent No. 8,606,632 Issues |
| 2014-01-01 | Period of Defendant's accused communications begins (approx.) |
| 2014-05-27 | U.S. Patent No. 8,738,435 Issues |
| 2016-02-22 | Complaint Filing Date |
II. Technology and Patent(s)-in-Suit Analysis
This analysis covers U.S. Patent No. 5,987,434 and U.S. Patent No. 6,999,938, which are asserted in Counts VII and III, respectively.
U.S. Patent No. 5,987,434 - "Apparatus and Method for Transacting Marketing and Sales of Financial Products," issued November 16, 1999
The Invention Explained
- Problem Addressed: The patent’s background section describes traditional methods for marketing financial products like insurance as substantially limited by the significant time and attention required from agents or telemarketers, which restricts the volume of transactions and the ability to personalize communications at scale (’434 Patent, col. 2:27-36). These systems were often unsophisticated and required human input and decision-making at critical steps (’434 Patent, col. 3:20-27).
- The Patented Solution: The invention is a computerized system that automates the marketing process by using client information, financial product information, and decision criteria to automatically select appropriate products and generate personalized client communications (’434 Patent, Abstract). A "Virtual Agent" module uses decision logic to analyze client needs and demographics, select suitable plans and products from a database, and then pass that information to an output module that prepares individualized correspondence, such as a presentation letter (’434 Patent, col. 9:41-50; Fig. 5).
- Technical Importance: The invention purported to create a "new paradigm" compared to earlier mass-marketing by enabling the automated, high-volume production of tailored offers for complex products based on individual client data, not just generic demographics (Compl. ¶14, ¶21).
Key Claims at a Glance
- The complaint asserts infringement of "one or more claims" of the ’434 Patent (Compl. ¶145). Independent claim 1 is representative.
- Essential elements of independent claim 1:
- Means for inputting client information, information about financial products, and decision criteria pertaining to selection from among the financial products.
- Means operatively coupled to the inputting means for storing the client information, the financial products information, and the decision criteria.
- Means operatively coupled to the storing means for using the client information, financial products information, and decision criteria to select a subset of the financial products for each of the clients appropriate for that client.
- Means for preparing a client communication for each of the clients which identifies the subset of the financial products for that client.
U.S. Patent No. 6,999,938 - "Automated Reply Generation Direct Marketing System," issued February 14, 2006
The Invention Explained
- Problem Addressed: The patent’s background describes a need in direct marketing for an automated and flexible reply mechanism that can respond to a wide range of client inquiries beyond simple purchase or non-purchase responses (’938 Patent, col. 2:48-54). Traditional systems could not efficiently handle follow-up questions or requests for modified offers, leading to lost sales opportunities.
- The Patented Solution: The invention is a system for automatically preparing customized replies to communications from clients. Each original communication and subsequent response is tagged with a unique label, allowing the system to maintain an ongoing, automated "conversation" with the client until a purchase decision is made or the client stops responding (’938 Patent, Abstract; col. 3:4-14). This enables the system to generate tailored replies to various client actions, such as requests for more information or different quotes.
- Technical Importance: This technology aimed to increase the conversion rate of mass marketing campaigns by automating the follow-up process, which was previously too costly and time-consuming to handle individually at scale (Compl. ¶4).
Key Claims at a Glance
- The complaint asserts infringement of "one or more claims" of the ’938 Patent (Compl. ¶82). Independent claim 1 is representative.
- Essential elements of independent claim 1:
- Receiving one or more responses from one or more consumer entities, said responses comprising nonpurchase requests and being in response to mass marketing communications relating to offerings for one or more financial products or services.
- Automatically generating one or more replies, each reply being generated prior to receipt of a purchase commitment and customized for a consumer entity.
- Delivering said replies to corresponding consumer entities.
Multi-Patent Capsules
U.S. Patent No. 7,890,366, "Personalized Communication Documents, System and Method for Preparing Same," issued February 15, 2011
- Technology Synopsis: This patent covers systems that automatically generate personalized marketing communications which include alternative descriptions, characteristics, or identifications for the offered financial product or service (Compl. ¶7(a)).
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶41).
- Accused Features: Defendant’s preparation of personalized and automated direct mail that contains varied or alternative descriptions of its services and provides customized pricing information (Compl. ¶41-51).
U.S. Patent No. 8,234,184, "Automated Reply Generation Direct Marketing System," issued July 31, 2012
- Technology Synopsis: This patent describes systems that automatically generate customized communications offering financial products and then generate automated replies to client responses received via a website (Compl. ¶7(b)).
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶59).
- Accused Features: Defendant’s system for creating marketing communications that include an internet address, receiving responses via a website, and replying to those responses (Compl. ¶60-74).
U.S. Patent No. 8,738,435, "Method and Apparatus for Presenting Personalized Content Relating to Offered Products and Services," issued May 27, 2014
- Technology Synopsis: The patent relates to systems that automatically select appropriate products for a client and then prepare personalized communications that include personalized content relating to an offer (Compl. ¶7(d)).
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶99).
- Accused Features: Defendant’s use of an automated system to successively generate personalized marketing communications that include alternative information and content related to an offer (Compl. ¶100-104).
U.S. Patent No. 8,606,632, "System, Method, and Computer Program Product for Selecting and Presenting Financial Products and Services," issued December 10, 2013
- Technology Synopsis: This patent covers systems that use client data to automatically select financial products and prepare personalized communications offering the selected products or services, including bundled plans (Compl. ¶7(e)).
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶112).
- Accused Features: Defendant’s automated generation of information for bundled plans using stored data, personal data, and decision criteria to produce communications that include offers (Compl. ¶113-120).
U.S. Patent No. 8,352,317, "System for Facilitating Production of Variable Offer Communications," issued January 8, 2013
- Technology Synopsis: The patent describes a system that uses client information to automatically select financial products and prepare personalized communications containing variable portions that differ between customers (Compl. ¶7(h)).
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶128).
- Accused Features: Defendant’s use of a computer system to automatically produce marketing communications containing different, variable, and common portions based on personal data and selection criteria (Compl. ¶129-137).
U.S. Patent No. 7,860,744, "System and Method for Automatically Providing Personalized Notices Concerning Financial Products and/or Services," issued December 28, 2010
- Technology Synopsis: This patent relates to systems that automatically provide personalized notices concerning financial products over an electronic network, where the notice contains variable information (Compl. ¶7(f)).
- Asserted Claims: The complaint asserts "one or more claims" (Compl. ¶160).
- Accused Features: Defendant’s automated preparation and sending of personalized communications and notices over the Internet using a database with client information to generate variable information (Compl. ¶161-171).
III. The Accused Instrumentality
Product Identification
- The accused instrumentalities are Defendant Consumer Cellular, Inc.’s "products and services that generate customized marketing materials, such as letters, e-mails, and other communications" for its cellular phone services (Compl. ¶28).
Functionality and Market Context
- The complaint alleges that Consumer Cellular uses an automated system to generate different marketing offers for different consumers (Compl. ¶29, ¶47). The complaint provides an example of two different direct mail letters, "Consumer A" and "Consumer B," allegedly sent between 2014-2015 (Compl. p. 11). This visual evidence shows that while both offers are for cellular service starting at $10 per month, the offer to Consumer B includes an additional "$20 credit on your first invoice" that is not present in the offer to Consumer A, illustrating the alleged use of customization (Compl. ¶29, p. 11). The complaint alleges these customizations are based on consumer data such as address, income, or age (Compl. ¶29). It also alleges that Defendant has sent tens of millions of such communications since 2005 (Compl. ¶30).
IV. Analysis of Infringement Allegations
5,987,434 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| means for inputting client information, information about the financial products, and decision criteria... | The Defendant's system allegedly selects, stores, and uses information about its customers, its financial products (cellular service plans), and decision criteria to generate offers. | ¶146, ¶148, ¶149, ¶150 | col. 6:46-51 |
| means... for storing the client information, the financial products information, and the decision criteria | The system is alleged to store customer information, financial product information, and the rules used to make decisions. | ¶148, ¶149 | col. 7:59-63 |
| means... for using the client information, the financial products information, and the decision criteria to select a subset of the financial products... | The system allegedly uses decision criteria and stored information about customers and products to select and offer financial products to those customers. | ¶150, ¶151 | col. 9:41-44 |
| means for preparing a client communication for each of the clients which identifies the subset of the financial products... | The system allegedly prepares direct mail communications that offer the selected financial products to customers based on the stored information and decision criteria. | ¶152 | col. 13:9-16 |
6,999,938 Infringement Allegations
| Claim Element (from Independent Claim 1) | Alleged Infringing Functionality | Complaint Citation | Patent Citation |
|---|---|---|---|
| receiving one or more responses from one or more consumer entities, said responses comprising nonpurchase requests... | The Defendant allegedly receives responses to its marketing communications from consumers, including responses that do not include a request to purchase a product. | ¶87, ¶88 | col. 3:1-4 |
| automatically generating one or more replies,... customized for a consumer entity... | The Defendant's system is alleged to automatically generate replies to consumer requests, and these replies are customized. | ¶89, ¶90 | col. 3:4-9 |
| delivering said replies to corresponding consumer entities | The Defendant allegedly communicates the generated, customized replies to consumers who had requested information. | ¶91 | col. 3:10-14 |
- Identified Points of Contention:
- Scope Questions: The infringement analysis may focus on whether the term "financial products," which the ’434 Patent primarily describes in the context of insurance and annuities, can be construed to cover the "cellular service" offered by the Defendant (Compl. ¶41). A central question will be whether the patent’s teachings are limited to the traditional financial instruments disclosed or extend to any product or service involving ongoing payments or financing.
- Technical Questions: The complaint alleges that the Defendant’s system uses "decision criteria" to "select" products. A key factual question will be what evidence demonstrates that the accused system performs a specific, rule-based selection process as required by claim 1 of the ’434 Patent, rather than simply sending pre-determined, demographically-targeted mailers to different customer lists. The complaint provides visual evidence of different offers, but not of the underlying selection process (Compl. p. 11).
V. Key Claim Terms for Construction
For U.S. Patent No. 5,987,434:
- The Term: "financial products"
- Context and Importance: This term is central to the dispute, as the accused services involve cellular phone plans, not the insurance or banking products explicitly detailed in the patent. The case may turn on whether "cellular service" (Compl. ¶41) falls within the scope of this term as used in the patent.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The specification states that financial products "refers to insurance products... and the like. Financial products, however, also may include other forms of financial instruments" (’434 Patent, col. 5:52-59). This "and the like" and "other forms" language may support an argument for a broad definition not limited to the enumerated examples.
- Evidence for a Narrower Interpretation: The detailed examples and embodiments provided in the specification exclusively describe insurance products (e.g., mortgage life, term life) and annuities (’434 Patent, col. 5:60-65; Figs. 6-9). This focus could support an argument that the term's scope is implicitly limited to the context of the disclosed embodiments.
For U.S. Patent No. 6,999,938:
- The Term: "customized replies"
- Context and Importance: The infringement allegation rests on the Defendant generating "customized" replies to consumer inquiries (Compl. ¶90). The definition of "customized" will be critical. Practitioners may focus on whether this requires more than simply inserting a customer's name into a form letter or whether it requires substantive changes to the offer itself based on the specific consumer request.
- Intrinsic Evidence for Interpretation:
- Evidence for a Broader Interpretation: The patent abstract states the system provides "individualized replies to each of a variety of response options," suggesting customization is tied to the specific "response option" chosen by the user, which could be interpreted broadly.
- Evidence for a Narrower Interpretation: The patent distinguishes its invention from prior art that was "not particularly customized to the needs of a particular client" (’938 Patent, col. 1:50-52). This could suggest that "customized" implies a reply tailored to the unique, substantive needs expressed in a consumer's communication, not just a pre-programmed response to a selected option.
VI. Other Allegations
- Willful Infringement: For each of the eight asserted patents, the complaint states that "To the extent that facts learned in discovery show that Defendant’s infringement... is or has been willful, Plaintiffs reserve the right to request such a finding at the time of trial" (Compl. ¶56, ¶79, ¶96, ¶109, ¶125, ¶142, ¶157, ¶176). The complaint does not plead specific facts supporting pre-suit knowledge of the patents.
VII. Analyst’s Conclusion: Key Questions for the Case
- A core issue will be one of definitional scope: can the term "financial products," rooted in the patent family's context of insurance and banking, be construed to cover the cellular phone service plans offered by the Defendant? The outcome of this question may determine the applicability of several of the asserted patents.
- A key evidentiary question will be one of technical operation: what proof will be offered to show that the accused marketing system performs the specific function of using "decision criteria" to "select" different products or product features for individual consumers, as claimed in patents like the ’434 Patent, versus merely sending different, pre-packaged offers to distinct, demographically-sorted mailing lists?
- A final central question relates to causation and reply: for claims from patents like the ’938 Patent, what evidence will demonstrate that the Defendant's system automatically generates a "reply" that is causally linked to a specific, preceding "nonpurchase request" from a consumer, as opposed to generating a new, independent marketing communication?